OLD ORCHARD BEACH, Maine — If the town and the Edith Belle Libby Memorial Library cannot settle a disagreement soon, library officials say the library will have to shut its doors next week.

Last month, officials discovered an alleged misappropriation of funds at the library, and the case is currently under investigation by police in conjunction with the Maine Attorney’s office. Shortly after the alleged embezzlement was discovered, Town Manager Mark Pearson announced the town would begin to administer the library’s payroll and operations.

The library last year received about $226,000, and it had been past practice for the town to give the library the money in quarterly payments, while the library hired its own bookkeeper and used a payroll service.

Library officials have asked Pearson to sign a memorandum of understanding before they hand over financial records. The memorandum outlines an agreement that would have the town administer the bills and payroll and have the library’s board of trustees run the library.

“By signing this memo, it will put an end to the question of who will be managing the library funds on an ongoing basis,” said former Board of Trustees Treasurer Alice Langdon earlier this week. Langdon has since resigned from the board.

The library, said interim director Lee Koenigs, is a “quasi-municipal corporation” and not a town department. It is run by a board of trustees and creates its own budget. Trustee Wendy Brown said the director answers to the board of directors, not the town manager, and the board hires staff.

Brown said that, as a quasi-municipal corporation, the library can have the town write the checks and do the payroll, but the library would still need to have control of the purchasing decisions, under the library’s bylaws.

Koenigs said the library does not need a memorandum of understanding per se, but it does need a signed agreement in order for the town to administer the finances.

Pearson said a signed agreement is not necessary for the town to administer the finances and payroll. He said the decision whether to sign a memorandum of understanding is a town council decision, not a town manager decision.

Pearson said he has a fiduciary duty and he’s making a simple request to assure “transparency and accountability” of taxpayer’s money.

Earlier this week, Pearson said library officials are asking for a “quid pro quo,” or one thing in return for another, but, he said, “One has nothing to do with the other.”

“This whole threat to close the library is meant to put political pressure on the town council and the town manager,” said Pearson.

The library received its last quarterly payment on Jan. 1.

A notice on the library’s website reads, “Due to the possibility of impending closure, all library materials need to be returned to the library no later than May 9.”

After that date, said Brown and Koenigs, the library no longer will be able to continue meeting its payroll with its current funds.

“This town needs this library,” said Koenigs.

Town Council Chairman Bob Quinn said there will be an upcoming town council workshop to discuss library issues, including whether a memorandum of understanding or some other document needs to be signed. He had tentatively set a date for May 9, but some councilors had scheduling conflicts, so a date hasn’t been set yet.

Quinn said he hopes the town and the library can come to an agreement, as it would be unfortunate if the library had to close.